 Transportation

Management 

Communication
Water and electricity
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Principles of Management Basic Business Resources (7M’s)
and Organization In order to produce goods and services, businesses combine
many resources. These resources are generally categorized
as human and non-human resources. Human resources
MODULE 1 – BUSINESS OVERVIEW generally contribute their efforts for the achievement of
BUSINESS DEFINED business objectives through their knowledge, skills and
A business is any endeavor that attitude. Non-human resources are tangible resources being
combines the factors of production allotted and maximized in the general operation of the
– land, labor, and capital – to business. Business resources are collectively known as the
produce desired output for the Seven M’s of Management.
satisfaction of human needs and
wants for the purpose of profit,
growth and expansion. Desired 7 M’s of Management
outputs are in the form of goods and services. Goods are
classified into consumer goods, or those goods
for the direct consumption of consumers and
MAN MATERIALS
users; and producers’ goods, or those skills and efforts raw materials
intended to become components supplementary
to produce another output. complimentary
MONEY
Undesired Output financial capital METHOD
In the process of produ- procedures
cing desired goods and
services, businesses some- MACHINE
times are able to produce undesired outputs. These tools and MARKET INFO
outputs are in the form of wastes and pollutants that can equipment
harm the environment.

Kinds of Businesses or Industries

MOMENT
time resource feedback for decision
The following are the basic kind of businesses that are
engaged in one particular type of economic process:
1. Raw material industries
Extractive or primary industries engaging in agriculture,
Economic System Models
mining, fishing and lumbering for the immediate
Economic system refers to the model of production and
consumption of end users
distribution which take place in the society. Business is
2. Manufacturing
considered as an organized economic activity. The following
Producers of semi-manufactured or finished goods
are the types of economic system:
3. Distribution
1. Capitalism
The middlemen between the producers or manufacturers
The factors of production and distribution are owned and
and the consumers or users
managed by private individuals or corporations. There is no
4. Service Industries
government intervention in economic affairs (laissez faire).
Service providers falling under the following categories:
The essential characteristics of capitalism are private
a. Government service
property, economic freedom, free competition and profit
b. Financial services
motive.
c. Professional services
2. Communism
d. Domestic and technical services
The factors of production and distribution are owned and
e. General public services
management by the state. It is also called a command
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economy or classless society. In communism, there are no that an organization strive
private property, the government is the only seller, no to achieve; organizations
often have more than one goal;
these are purpose, vision, mission, and objectives.

economic freedoms, no profit motive, and the presence of S.M.A.R.T. Goal-setting

central planning. SMART goal setting brings structure and trackability into
3. Socialism goals and objectives. Instead of vague resolutions, SMART
It is a combination of capitalism and communism. The major goal setting creates verifiable trajectories towards a certain
and strategic industries are owned and managed by the objective, with clear milestones and an estimation of the
state while the minor industries belong to the private- goal's attainabililty.
sector. Examples of major industries are transportation,
electrification, mining, etc. Minor industries are candies,
cakes, toys, etc.
4. Mixed Economy
It is an economic system which combines the features of
capitalism and that of the socialism. The mixed
economy has elements of both central planning and
unplanned private business.

Division of Business
Business organizations typically consist of a number of
departments or functions and it is important to have an
appreciation of the purpose and activities of these
departments/functions in order to understand how
businesses operate.
Typically, a business will operate under three main
functions, namely: finance, production, and marketing. All
other departments are in support of these three
departments. The continious flow of business will depend
how each department will be able to accomplish its goals as
depicted in the diagram below:
Business Organization Defined
Business organizations are entities that combine efficiently
the various resources to produce goods and services for the
satisfaction of the needs and wants of its intended market
for profit.
Forms of Business Organization
A business can be organized in one of several ways, and the
form its owners choose will affect the company's and
owners' legal liability and income tax treatment. The most
common and their major defining characteristics are the
following:
1. Individual or Sole Proprietorship
A sole proprietorship is a business owned by only one
person. It is easy to set-up and is the least costly among all
forms of ownership. The owner faces unlimited liability;
meaning, the creditors of the business may go after the
personal assets of the owner if the business cannot pay
them.
The sole proprietorship form is usually adopted by small
business entities.

MODULE 2 – BUSINESS ORGANIZATIONS

An organization is defined as two Advantages Disadvantages

or more people who work 1. ease of formation 1. liabilities
together in a structured 2. tax benefits 2. taxes
way to achieve a specific 3. employment 3. lack of continuity
goal or set of goals. 4. decision making 4. difficulty in raising
Goals are the purpose capital
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 cooperatives are producers’ cooperative, credit
associations, and consumers’ cooperatives.

2. Partnership
A partnership is a business owned by two or more persons
Advantages Disadvantages
who contribute resources into the entity. The partners
1. easy formation 1. lack of secrecy
divide the profits of the business among themselves.
2. limited liability 2. lack of business
In general partnerships, all partners have unlimited liability.
3. perpetual existence acumen
In limited partnerships, creditors cannot go after the
4. social service 3. corruption
personal assets of the limited partners.
5. open membership 4. lack of mutual interest
Advantages Disadvantages
1. easy to form 1. unlimited liability
2. favorable credit 2. limited life of firm
standing 3. frozen investment
3. large capital 4. dispute among
Basic Consideration in Organization
4. greater management partners
Various considerations must be taken into account before a
ability
business organization can be formed. Some of the most
5. profit incentive
important considerations are the following:
6. tax advantages
7. ease of dissolution

1. Business plan
(goals – vision,
3. Corporation mission, and
A corporation is a business organization that has a separate objectives)
legal personality from its owners. Ownership in a stock 2. Organizational
corporation is represented by shares of stock. Structure
The owners (stockholders) enjoy limited liability but have (systems and manpower)
limited involvement in the company's operations. 3. Resources (human
The board of directors, an elected group from the
and non-human)
stockholders, controls the activities of the corporation.
4. Market (customers
and clients)
CORPORATION 5. Competitors
6. Marketing strategies
Advantages Disadvantages
1. limited liability 1. double taxation
2. sources of capital 2. excessive tax filing
3. ownership transfer 3. independent Principles of Organization
4. perpetual life management No organization will
function efficiently
without any direction set
4. Cooperative by the top management
Cooperatives are association of individuals for the purpose people. In the process,
of performing for the group essential economic services like several organizing
production, consumption, and distribution. Special kinds of principles are being

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tapped to guide managers in the proper handling of people Organizational structure determines how the roles, power
and other resources. and responsibilities are assigned, controlled, and
coordinated, and how information flows between the
different levels of management.

The following key Organizing Principles are important for An organizational chart usually depicts the flows in
managers to become efficient and effective leaders of the organizational structure: relationships, groups, and
business: coordination.
1. Division of Labor
grouping of the workforce into functional groups Types of Organizational Structure
2. Division of Work 1. Line Type
breaking down a task into different jobs the simplest form and common among small enterprises;
3. Specialization authority travels downwards from top and accountability
easy repetition of work resulting to less errors and upwards from bottom along the chain of command, and
mastery of the job each department manager has control over his or her
4. Functional Definition department's affairs and employees.
activities are grouped in accordance with their relation to
one another
5. Span of Control
number of people a manager directs
6. Scalar Chain of Command
the formal distribution of authority in a hierarchical
fashion
7. Unity of Command
direction and goals coming only from one person
8. Authority
formal responsibility assigned to one person; it is a
legitimate power ADVANTAGES DISADVANTAGES
9. Delegation 1. top to bottom 1. rigid form
process of assigning formal authority and responsibility authority 2. tendency for line
for completion of an activity authority to become
2. clear line of
10. Accountability and Responsibility dictatorial
responsibility and
superior has the responsibility for the activities of his
accountability 3. no provision for
subordinates
3. clear unity of specialists and
11. Efficiency
command specialization
greatest benefit to is achieved when the allocation of
4. line personnel are
resources are maximized resulting from a minimum cost
12. Coordination involved in achieving
the process of integrating the efforts of individuals and objectives
departments 5. communication is
fast
MODULE 3 – ORGANIZATIONAL STRUCTURE

An organizational structure 2. Line and Staff Type

is a system used to define a functional specialists are added in the line; common
hierarchy within an among large enterprises
organization or the typical
hierarchical arrangement of Staff is basically advisory in nature and does not possess
lines of authority, and command authority over line managers and members.
communication, and duties Types of staff are:
in an organization. 1. General – similar to executives; serves as assistant

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 2. Specialized – expert staff advice and service to all
employees

4. Departmental or Divisional Organization

grouping of people or activities with similar characteristics
into a single unit; a self-contained structure; small
organizations under a large organization

Types of departmental organization

1. By product
2. By customer
3. By area
4. By time

ADVANTAGES DISADVANTAGES
1. improves the 1. confusion and
quality of decision conflict that arise
resulting to opera- between line and
tional economics staff
2. strategic planning 2. high cost

3. Functional Type by Frederick W. Taylor

permits a specialist in a given area to enforce his directive 5. Project Organization
within a clear scope of authority like quality control, temporary organizational structure formed for specific
safety projects for a specified period of time and goal like auditing,
and labor relations engineering, and marketing research

Specialists are selected on the basis of task related skills and

technical expertise rather than decision-making experience
or planning ability.

ADVANTAGES DISADVANTAGES
1. enhances opera- 1. narrow
tional efficiency and specialization
quality of product or
service
2. basis for grouping
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together of job
6. Matrix Organization
combination and interaction of project or functional
structures; responsible for accomplishing work on schedule
and within the prescribed budget; members has two
managers: project and functional manager.

Management Defined
Management is the process of planning, organizing, leading
and controlling the work of organizational members and of
using all available organizational resources to reach stated
organizational goals.